BB/11E/03 VAT—Court of Appeal decision in the case of Electronic Data Systems Limited (EDS)
Business Brief, Issue 11. 25 July 2003
Customs & Excise will be petitioning the House of Lords to review the recent Court of Appeal decision in the EDS case. The decision challenges the UK's interpretation of the finance exemption in European law.
EDS provide loan arrangement and execution services to banks in relation to the granting of personal loans. The services include provision of a staffed call centre, the printing and despatch of loan agreement documentation, the transfer of funds via the BACS system on the release of loans and the administrative work related to handling loan accounts and repayments.
Customs ruled that the service provided by EDS to banks did not fall within the scope of the finance exemptions because they were the taxable supply of clerical and administrative functions. EDS appealed, claiming that it was making exempt supplies either as the grantors or negotiators of credit or alternatively as supplying a service of making payments and transfers. The tribunal allowed EDS's appeal on the grounds that EDS were granting credit. The Court of Appeal agreed with